The Azzurri dominated the opening 45 minutes of the Group C clash with Croatia in Poznan's Municipal Stadium, creating a number of chances before deservedly taking a 39th-minute lead courtesy of Andrea Pirlo's stunning free-kick.
Italy, however, lacked the same intensity after the interval and conceded an equaliser 18 minutes from time as Mario Mandzukic made it three goals in two games with a poacher's finish in off the right-hand post. It now leaves Italy knowing they have to beat the Republic of Ireland on Monday if they are to stand a chance of reaching the quarter-finals.
Prandelli denied being angry with the result, stating: "Of course you are a bit bitter because when a side plays football, creates a lot of scoring chances, they need to put a game to bed, to kill off the game. You need to be more clinical in front of goal, show more determination when you get in their half and get near their goal.
"If you can't win the game, you don't kill it off then you are going to have regrets," he added. "Football is unique in that you can have one cross and it can ruin everything you have built up over the game, so of course there is a lot of regret. But we're still convinced we can get through. Mathematically we are not out of it. We need to play well, but we have wasted an opportunity here."
Prandelli also dismissed suggestions his team lacked character and instead countered that fitness was to blame for their second-half performance. "I don't think we lack character in any way shape or form. I'm not entirely convinced by this," said Prandelli. "But we do struggle, there is a drop in our level at the 60th minute. In terms of the two games, at that stage of the game we lack fresh legs. We need to rest up after this, we need to see how we manage our energy levels."
Explaining his side's second-half turnaround, Croatia coach Slaven Bilic said: "It's always difficult playing against big teams. There was a lot of pressure on us in the first half, we didn't play well and we know we can do much better.
"We changed things around for the second half and we dominated, we were the better team," he added. "We then just waited for our chance and in the end we were close to victory. We showed character, we were strong."
Bilic declined to look ahead to the next game with Spain, simply saying: "All I will say is that I'm very optimistic for the next match. I'm really satisfied we've four points from the two games. It could be even better but four points is optimal, realistic and now we have a real chance to go through."